Amazon subpoenaed over counterfeit textbook sales

Three of the world’s largest textbook publishers have subpoenaed Amazon to reveal the names and financial accounts of online vendors who allegedly sell counterfeit books at “too good to be true” prices.

Pearson Education, Cengage Learning and McGraw Hill Education are suing 100 unnamed Amazon marketplace sellers for copyright infringement. In a complaint filed in New York federal court earlier this month, the publishers accused the sellers of “hiding behind the anonymity of internet pseudonyms” to profit from unauthorised copies of their books.

Amazon said it was working with the publishers to identify offenders and remove fraudulent items. “Amazon has zero tolerance for the sale of counterfeit items on our site,” said spokesman Erik Farleigh.

“We are taking legal action and aggressively pursuing bad actors,” he added, declining to specify what exactly that legal action would be.

Amazon was not named a defendant in the lawsuit. However, the publishers said the ability of the vendors to sell through the world’s largest online retailer “causes even greater damage” to their businesses by “undercut[ting] sales and the perceived value of authorised and legitimate copies” of the books.

The lawsuit comes at a turbulent time for educational publishers. The market for textbooks and course materials is under pressure from the shift from print to digital and a slowing rate of college enrolments in the US.

Pearson has been particularly hard hit. Its shares tumbled 30 per cent last week after the UK company issued its fifth profit warning in less than five years, which it blamed on the deterioration of its US higher education business. Overall, US higher education publishers’ sales dropped more than 20 per cent in the final quarter of 2016, according to MPI, an industry research group.

Amazon has been fighting its own battles against fake products and fake reviews. Last Autumn the company sued several sellers who were hawking counterfeit goods on its site, and earlier in the year it sued for-profit “reviewers” who were getting paid to write positive reviews on Amazon.com. It would also be possible for Amazon to take legal action against the defendants named in the publishers’ lawsuit.

The breadth of Amazon’s selection makes such practices difficult to stamp out entirely, however. Nearly half of the items sold on Amazon are from third-party sellers, a percentage that has risen rapidly in recent years. In 2016, the company sold more than 2bn units through its “Fulfillment by Amazon” service, which provides shippers with storage and shipping for a fee, up from 1bn units during 2015.

While the publishers do not know the real identities of those they are accusing of copyright infringement, the lawsuit named 30 Amazon storefront accounts the defendants allegedly use to sell unauthorised textbooks.

Many of the sellers named in the lawsuit appear to be relying on the reputation of the “fulfilled by Amazon” label to help them boost sales. “All products Fulfilled by Amazon so you can be assured your purchase is legitimate and meets the standard you seeking (sic),” wrote seller TheBookArb, one of those named in the lawsuit, on their Amazon seller page.

However, Amazon does not actually guarantee the legitimacy of items sold through the “Fulfilment by Amazon” programme, it just stores and ships goods that are provided by the seller.

This item was not sold as advertised. Poor quality, very clearly bootlegged (copies made), with repeated pages

Judge Deborah Batts of the Southern District of New York has ordered Amazon to freeze funds in any accounts connected to the accused sellers and to stop “selling distributing, transferring or disposing of any” books on behalf of the accused sellers. The court also granted a temporary restraining order blocking the accused vendors from selling any counterfeit texts or infringing on the publishers’ copyrights.

Several unhappy customers had already posted complaints on the Amazon pages of the sellers named in the suit. “This item was not sold as advertised. Poor quality, very clearly bootlegged (copies made), with repeated pages,” wrote one customer of a seller operating under the name acerbooks.

Because books are grouped by their unique International Standard Book Number, and the bootleg books were included under the same ISBN, buyers often did not realise they were ordering a pirated copy, the publishers alleged. “The consumer is left to choose which price they want to pay and from which seller,” the suit said.

Two of the sellers named as defendants said they had not heard of the lawsuit when contacted by the Financial Times on Monday.

“I do sell books that I buy from other distributors but rarely see them,” said one seller who operates under the name happy_textbooks.

Other sellers did not respond to requests for comment. Nearly all of the Amazon seller storefronts belonging to the defendants had been taken down on Monday evening.